IDEAS home Printed from https://ideas.repec.org/h/pal/palchp/978-0-230-23548-9_4.html
   My bibliography  Save this book chapter

The Short Period: Effective Demand and the Labour Market

In: Introduction to Post-Keynesian Economics

Author

Listed:
  • Marc Lavoie

Abstract

The main objective of this chapter is to examine the role of effective demand and its impact on the labour market. As stated in Chapter 1, the claim that economies are demand-led is a crucial argument of post-Keynesian economics. In fact, effective demand is a key factor of the theory of employment. Contrary to neoclassical theory, as we shall see, a decrease in real wages does not increase the demand for labour. Rather, the opposite is true: an increase in real wages leads to an increase in consumption, which in turn increases the demand for labour and decreases unemployment. As a result, an increase in he minimum wage and in the average wage will have beneficial effects on employment and the overall economy — a conclusion that stands in contrast to what is assumed by those who defend TINA.

Suggested Citation

  • Marc Lavoie, 2009. "The Short Period: Effective Demand and the Labour Market," Palgrave Macmillan Books, in: Introduction to Post-Keynesian Economics, chapter 4, pages 83-107, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-23548-9_4
    DOI: 10.1057/9780230235489_4
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palchp:978-0-230-23548-9_4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.